ABSTRACT
Performance contracts have been suggested as a way to improve the performance of public agencies at all levels of government. The experience with performance contracts has implications for far more than written contracts in government. This chapter focuses on written contracts because it is methodologically more convenient to analyze explicit agreements. It presents a theoretical framework for analyzing contracts and discusses the sample. The chapter analyzes the impact of performance contracts on the sample state-owned enterprises (SOE) and assesses why the contracts performed as they did. It argues how well performance contracts improved performance in a sample of 12 SOEs in 6 countries and explains the successes and failures in terms of the three factors. They are information, incentives, and commitment. Mary Shirley has made an interesting analysis and evaluation of cross-country experiences regarding performance contracts as tools for improving public services in SOEs.
